Laurie Schmitt Family Law

W. Michigan family law specializing in Collaborative Divorce

616.608.4634

Marital Property

What Am I Entitled To In A Divorce?

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Your spouse says they want a divorce.  And they tell you you’re not entitled to any equity in the home, to any spousal support, or any portion of their retirement accounts or pensions. The truth is if you or your spouse files for divorce, Michigan law requires an equitable and fair division of the marital assets. Therefore, you won’t walk out of your marriage penniless, and can expect to receive a fair division of the marital assets. If you and your spouse fail to come to an agreement regarding the division of assets, the judge will decide at trial. The next question is what is considered marital property in the State of Michigan?

MARITAL PROPERTY

Divorce

The general rule is if you obtained the property during the marriage, it’s considered marital property. Property includes houses, vehicles, contents of your home (shed, garage, barn), retirement accounts, pensions, and any other personal property you’ve acquired in your marriage. But what happens if your name is not on any of the titles or deeds? It doesn’t matter how something is titled or deeded.  Even if your name is not on the title or deed, it’s still a marital asset to be divided fairly in your divorce. 

THE HOME

The marital home is where you and your spouse lived while married. If your spouse wants to retain the marital home, they will be required to pay you one half of the equity in the marital home.  Equity is calculated as follows:  Appraised value – mortgage balance = equity. You take the equity number and divide it half. That becomes your share of the equity of the marital home.  If your spouse is unable to refinance to pay you the equity balance, or unable to locate the money from another source, the marital home will need to be sold, and the net proceeds divided between you and your spouse.

Even if you move out of the marital home before the divorce is completed, you will still retain a property interest in the marital home. You do not forfeit your property interest in the marital home simply because you moved out before the divorce is completed.

RETIREMENT ACCOUNTS/PENSIONS

If you or your spouse have a retirement account or pension, the part of the retirement account or pension accrued during marriage is a marital asset and to be divided between the parties. If you or your spouse can show that a portion of your retirement account or pension was accrued prior to marriage, that amount will not be subject to division in the divorce.

VEHICLES

When is comes to dividing vehicles, typically each person keeps their vehicle. However, if the vehicles are not equal in value, the values need to be equalized. You would obtain blue book values for each vehicle, minus any loan balance, to determine the value of each vehicle.  From there you can determine if the values need to be equalized.

PROTECTING YOUR ASSETS.

Divorce can be emotional and messy, and it’s natural for anyone going through a divorce to want to protect their financial interests. Maintaining an objective view of the situation can be difficult when you are struggling with complex emotional issues and personal tensions in your divorce. As an experienced Michigan divorce attorney, Schmitt Law, PLLC can help you maintain control over your property in divorce, and provide detailed guidance and support throughout every step of the process. The right attorney can increase the likelihood of you securing a favorable outcome to property division in your divorce.

Laurie Schmitt of Schmitt Law, PLLC has years of experience representing clients in a wide range of difficult divorce cases. We understand the financial concerns our clients often have regarding their property ownership rights and the doubts they often experience when it comes to property division in divorce.

If you are seeking a divorce, contact us today to schedule a consultation. Contact Schmitt Law, PLLC online or by calling (616) 608-4634 for a consultation today. Our office is located at 401 Hall Street SW, Suite 112D, Grand Rapids, MI 49503.

Is Living In The Marital Home Together During The Divorce Right For You?

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Your divorce has been filed. Now, where do we live while our divorce is pending? Do we stay together, or do we live apart?

For most couples, it may not financially viable to maintain two homes until the parties have reached an agreement on the financial issues (division of assets/debts, who will retain the marital home, amount and timing of equity payout). That leads to parties remaining in the marital home while the divorce in pending, living in separate bedrooms or locations of the home.

Before you agree to continue living in the marital home with your spouse ask yourself the following questions:

Living in the Martial Home together
  • Are you willing and able to maintain a civil relationship while living in the same home?
  • Are you willing and able to refrain from fighting in front of the children?
  • Are you willing and able to refrain from talking about the divorce with the children?
  • How will the children react when they see you sleeping in separate places in the home?
  • Are you willing and able to respect the other’s personal space and boundaries?

If you intend to live with your spouse while the divorce is pending, you should discuss the following:

  1. Will there be any ground rules such as how, when, and how frequently you and your spouse will talk about the divorce, are visitors allowed, who will be responsible for the household chores, and other issues related to running the marital home.
  2. What will the division of debt look like?  Will it remain status quo, or will there be a new division of debt? In an effort to avoid unnecessary disagreements, it’s best to have an agreement regarding finances at the beginning of the divorce action.
  3. Will each party be afforded private parenting time with the children? If you have been living together (but essentially apart) for some time, it is not unusual for parties to want individual time with the children. Once again, an agreement between the parties can avoid much disagreement later.
  4. Will the responsibilities of the children remain the same, or should there be a new division of responsibilities? Now that the divorce has been filed, parties may want to revisit “how things have always been done”, allowing both parties equal responsibility for the children.
  5. Where will each of you sleep while sharing the marital home?  If you are in separate bedrooms (or someone is residing in the basement), it is best to discuss privacy issues such as not entering into the other’s sleeping quarters, respecting the other’s personal items, and whether locks should be installed to ensure privacy. 

For many couples, living together is a necessary arrangement until the completion of the divorce.  Although it may seem smart to maintain financial status quo during the divorce, living together while the divorce is pending may not be best for some parties, nor the children. This is an issue best discussed with your family law attorney.

Contact the Knowledgeable Michigan Divorce Attorney at Schmitt Law, PLLC for Immediate Assistance

If you filed for divorce, or are considering filing in the near future, contact the Michigan family law attorney at Schmitt Law, PLLC.  We have extensive experience handling all types of Michigan divorce cases and the related issues that frequently come up in the divorce process, including spousal support, child custody, and child support. We provide custom-tailored legal advice and solutions for clients. To learn more about how we can help you through the divorce process, contact Schmitt Law, PLLC today by completing our online contact form, or calling us at (616) 608-4634 to schedule a consultation.

How Does Debt Work In a Divorce?

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WHAT IS MARITAL DEBT? 

Marital debt is defined as any debt incurred during the marriage (before the date of separation).  If you are still living together, then we look at the filing date of the divorce. As a general rule, both spouses will be responsible for one half of the debt incurred during the marriage, no matter who spent the money, and no matter how the money was spent.

HOW DO WE DIVIDE DEBT?

Now that you and your spouse have agreed to seek a divorce, it is imperative that each of you understand what debt you have accumulated, and how it will be divided.

Debt in a Divorce

It makes sense that you and your spouse talk about your debt and make decisions on who will retain what debts. You should discuss if and how you will refinance any debt that the other spouse is legally responsible for. And, you should agree to close joint credit cards and lines of credit now, agreeing that no further joint debt will be incurred.  Inevitably you will need to stop using joint credit cards, and incurring joint debt. So, the sooner you divide your finances, the better.

WHAT HAPPENS IF WE ARE UNABLE TO COME TO AN AGREEMENT?

If your spouse refuses to work with you to develop a post-divorce financial plan, then your next step is to know what debt you have. If you have little or no information about your debt, you will need to educate yourself on the financial aspects of your marriage.

First, order your credit reports. This will show you what debt you have under your name. It may not be all inclusive of the marital debt.  But it is a start in getting the full picture of your debt.  Second, write down all of the debts you know. Write down the names of creditors, current balances, account numbers, and note who is legally responsible for each debt. This will assist your attorney and the court in understanding what debt you have, and what the balances were at the time of separation or time of filing the divorce.

In the event that you and your spouse cannot come to an agreement privately, or through mediation, the judge will be the decider of the division of debt.

WHO WILL BE RESPONSIBLE FOR THE DEBT AFTER THE DIVORCE?

Assuming all of your debt is marital, it will be divided equally between you and your spouse.

PROTECT YOURSELF!

Cancel all joint credit cards now! You may bear the responsibility of these debts after your divorce. By cancelling joint credit cards, you are protecting yourself from future responsibility of new debt.

DISCLAIMER

The determination of what may be marital debt in any specific divorce case, and how it will be divided can be complex. This blog discusses only the basic premise that the debt you and your spouse have is marital and will be divided equally. However, laws surrounding divorce and division of debt can be complex.

GRAND RAPIDS COLLABORATIVE DIVORCE ATTORNEY SERVING KENT, OTTAWA, AND ALLEGAN COUNTY.

Divorce can be emotional and messy, and it’s natural for anyone going through a divorce to want to protect their financial interests. Maintaining an objective view of the situation can be difficult when you are struggling with complex emotional issues and personal tensions in your divorce. As an experienced Michigan divorce lawyer, Schmitt Law, PLLC can help you maintain control over your property in divorce, and against taking on responsibility of debt that may not be marital. We will provide detailed guidance and support throughout every step of the process. The right attorney can increase the likelihood of you securing a favorable outcome to property and debt division in your divorce.

Laurie Schmitt of Schmitt Law, PLLC has years of experience representing clients in a wide range of difficult divorce cases. We understand the financial concerns our clients often have regarding their property ownership rights and the doubts they often experience when it comes to property division in divorce. If you are seeking a divorce, contact us today to schedule a consultation. Contact Schmitt Law, PLLC online or by calling (616) 608-4634 for a consultation today.

What Is Considered Marital Property In The State of Michigan?

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Is the house considered marital property?

Property in Michigan

If the house was acquired during the marriage and paid with marital funds, it is marital property.  If one party is to retain the house, the house should be appraised (considering the volatility of the current market).  Once the fair market value has been determined, then we subtract all mortgages and home equity loans from the value to determine the net value of the home.  That net value will be divided equally between the parties.  This means the person retaining the home will owe the other party one half of the net value.  If the house was owned by one the parties prior to marriage, then we have an issue of “separate property”.  Separate property means that one party purchased the house prior to marriage and may have a claim to the equity that was in the home at the time of the marriage.  If this is the case, then it needs to be determined what the value of the home was prior to marriage, minus any mortgage on the home, to determine the net value.  That net value may be given to the party before determining the true net value to be divided.   As an example:

Home purchased prior to marriage

  • Appraised value at time of marriage  $100,000
  • Mortgage at time of marriage                $50,000
  • Net value                                        $50,000

The party owning the home prior to marriage would be given credit for the first $50,000.00 of equity in the home before determining what would be paid to the other party.

Of course, this example is an over-simplification, and further information would be needed before Schmitt Law, PLLC could provide legal advice about your specific case. Also see my blog “Marital Property verses Separate Property” for more information regarding this subject.

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Are bank accounts considered marital property?

If the bank accounts were opened during the marriage, they are marital property.  It does not matter if each party contributed equally to deposits into the account.  This means the person who may have contributed more does not get a larger division of the account, as the entire balance is considered marital for the purposes of division of the account.

Are retirement accounts considered marital property?

For the purposes of this blog, I will provide a simple answer.  If the money in the retirement account was acquired prior to marriage, and no other monies were deposited into the account during the marriage, the account most likely will be classified “premarital” and remain the sole account of one party.  This means it will not be divided between the parties.

If the money in the retirement account was deposited into the account during the marriage, the account will be classified as marital and should be divided equally between the parties.

Note, that this is a complex subject, and should be thoroughly discussed with your attorney, as there are gray areas to this issue that will not be discussed in this specific blog.  Note that this is a complex subject, and the answer provided is an over-simplification of the subject.  Further information would be needed before Schmitt Law, PLLC could provide legal advice about your specific case.

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Are vehicles, boats, or other recreational vehicles considered marital property?

 If the vehicle was purchased during the marriage, it will be classified as marital property.  The most typical scenario is that one party will retain the vehicle, the equity value* of the vehicle will be determined, and the other party will receive credit for one-half of the equity value.  Another scenario is that the vehicle may be sold, and the proceeds divided equally between the parties.

If the vehicle was purchased prior to the marriage, and marital funds were not used to purchase or pay for the vehicle (or any loan), the vehicle most likely will be classified “premarital” and remain the sole property of one party.  This means that not equity value will be shared with the other party.

* Equity value: the market value of a specific item, minus any loan owed on the item = equity value

Are wedding rings considered marital property?

 Engagement/Wedding rings are conditioned on the marriage taking place.  If you were married, then the ring is considered a gift, and does not need to be returned to the other party.  If there was no marriage, then the ring must be returned.  In a divorce situation, each party retains their respective engagement/wedding rings as their sole personal property.

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Are pets considered marital property?

In the State of Michigan, animals are considered “personal property” for the purposes of property division.  Some judges in Michigan treat dogs like any other personal property, in which case the highest bidder for the animal should win. The traditional method is simply assigning fair market value to the dog.

Some judges will consider other issues in determining the division of animals:

  • Nature of the pet, i.e., companion, family pet, service animal. •
  • Sentimental value of the pet to one party versus the other.
  • In which party’s name is the dog registered?
  • Even if the property is separate (i.e., owned by one party before the marriage) it can be transmuted into marital property through use, care, feeding, walks, etc., by the other party.
  • Who purchased the animal?
  • Who is the primary caretaker?
  • Show receipts for veterinary care by one party.
  • Show licensing records.
  • Grooming receipts by one party.
  • Dog training classes by one party.
  • Who feeds the dog?
  • Who buys things for the dog?
  • Neighbors’ testimony that one party always walked the dog,

Also see my blog “Divorce “The New Custody Case – Pets!” for more information regarding this subject.

To discuss solutions with your property division issues, or any other aspect of your divorce process, contact me, Laurie Schmitt, at Schmitt Law, PLLC. I am an Attorney, Mediator, and Collaborative Divorce lawyer.

I have filed for a Divorce, now what happens with the Marital Home?

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I have filed for a Divorce, now what happens with the Marital Home?

In any divorce situation, one of the most major and complex elements to be dealt with is the division of marital assets. As the marital home is typically the largest asset of divorcing couples, it’s important to know your options.

The most common dispositions of the marital home is that it will be sold, or one party retains it. There are other options. But, for the purpose of this blog, these are the two options that will be discussed.

SELLING THE MARITAL HOME: Often during a divorce, neither party is able to retain the marital home, and the home must be sold. It may be that neither party can afford the mortgage on their own, or neither party can afford to refinance to buy the other party out of their equity in the marital home. If you and your spouse have decided that selling the marital home is necessary, the first thing you must do is to agree on a date to list the marital home. Additionally, you must agree on a realtor, a list price, and eventually a sale price. Typically, the proceeds or deficiency would be divided equally between the parties. There are many exceptions to this rule, such as one party having special equity in the marital home, or one party receiving more than one half of the equity for various reasons.

ONE PARTY RETAINS THE MARITAL HOME: If one party will be retaining the marital home, then an appraisal should be completed by a licensed appraiser. That appraisal will give the parties and their attorneys a basis in which to appropriately value and make a division of the equity. Equity is determined by taking the current appraised value and subtracting the current outstanding loan(s) on the property, leaving you with the equity in the home.

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If one party is retaining the marital home, they will be required to “buy out” the other party’s one half of the equity. This can be accomplished by either refinancing the marital home, or providing the equity from another source in the assets of the marriage, such as retirement account. As a very simple example: Party “A” wishes to retain the marital home, and has a retirement account worth $100,000. Each party is to receive $50,000 of the retirement account. The equity in the marital home is $50,000. Party “B” is to receive $50,000 for their share in the retirement account, and $25,000 for the equity in the home. Party “A” would then pay party “B” $75,000 from their retirement account for payment of the retirement account and equity in the marital home. Of course, this scenario requires a retirement account balance large enough to accommodate payment of the equity, after the division of the retirement account.

Yet, another “buy out” option of the other party’s equity in the marital home would be to make payment of the equity over time. This would require the parties to agree to post-divorce installment payments, or a lump sum payment at a specific time.

As the decision regarding the marital home is a complex subject, it should be fully addressed with a qualified family law attorney.

Laurie Schmitt of Schmitt Law, PLLC is a West Michigan family law attorney specializing in collaborative divorce as well as separation, divorce, child custody and support, paternity, and other family law litigation. She is licensed by Michigan State Bar and the U.S. District Court for the Western District of Michigan, and has extensive advanced training in divorce mediation and collaborative divorce. Contact Laurie at (616) 608-4634 for a confidential consultation.

Marital Property versus Separate Property

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When is property considered separate property, and therefore not divisible in a divorce?

Courts make the distinction between marital property and separate property.  Marital property is simply property acquired during the marriage.  However, the Michigan statutes fail to define separate property.  Nevertheless, courts typically adopt the rule that separate property is property that is not divisible in a divorce because it was owned prior to marriage or acquired during marriage through a gift or inheritance.  If it was owned by a party prior to marriage, it normally will be awarded to that party.

But, there are times when separate property can be divided in a divorce.  Michigan case law supports the proposition that property claimed by one spouse to be separate property may be divided if the other spouse meets on of two statutory tests:

  • Contribution Test: that the claimant contributed to the “acquisition, improvement, or accumulation of the property” MCL 522.401.
  • Need Test: that the award to the claimant out of marital assets is “insufficient for the suitable support and maintenance” of the claimant and any children in their care.  MCL 552.23.
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What happens if you received an inheritance during the marriage?  If you receive an inheritance while you are married, and want that inheritance to remain separate property, you must never co-mingle it.  What does this mean?  It means that once you have co-mingled it with joint property, you cannot separate it.  It’s like making a cake.  Once the ingredients have been mixed together, you cannot separate them out, as they are indistinguishable.  Hence, if you want to protect an inheritance, you need to maintain it as separate funds.  Once the funds have been co-mingled, it will likely be considered marital property.

If you find yourself in the midst of a divorce, and have received an inheritance, or owned substantial property prior to your marriage, you need to know how to protect your property during your divorce.  As this is a complex subject, you should contact a family law attorney who can provide you with a legal opinion based off your specific facts.